Nypro Inc. is launching two more plants in China, including its first toolmaking facility there, as it continues to pull sizable new business to that country.
The Clinton, Mass., company opened the mold-building facility in Suzhou, China, in late January and will start a painting facility in Suzhou by the end of February, Nypro President Brian Jones said Jan. 27 during the Plastics News Executive Forum in Phoenix.
The company is contemplating a fourth plant on the same campus, located about two hours inland from Shanghai, he said. About a quarter of Nypro's expected 2003 sales of more than $800 million will come from China, Jones said.
The large injection molder is not alone in envisioning growth from the increasingly capitalistic nation. Tessy Plastics Corp. of Elbridge, N.Y., nearly will double the number of molding presses at its Shanghai plant and add an outside toolmaker and stamper to its building grounds in early 2003, said Tessy Vice President Joseph Raffa at the conference.
``Even our customers who aren't yet in China are giving us more business here because we have a plant in Shanghai,'' said Raffa, whose company started the 65,000-square-foot Shanghai facility in 2001. ``If we didn't have an Asian plant, they wouldn't want to do as much business with us.''
The facts for Nypro and Tessy are simple: More of their customers require molding and tooling support in China, even if they are not there yet themselves.
Another forum speaker, Bruce Smith of molder United Plastics Group Inc., said its new plant in Suzhou presents a model of efficiency coupled with the promise of low labor rates.
``We're going where our customers tell us to,'' said Smith, UPG president and chief operating officer.
But with Nypro and Tessy adding tooling to their arsenal of services in China, not all U.S.-based toolmakers are pleased. The idea of encouraging growth in China while U.S.-based shops suffer from a downturn rankled the top executive of one of the Phoenix area's largest toolmakers, Tech Mold Inc. of Tempe, Ariz.
``The companies that do decide to go global are doing it at the expense of U.S. jobs,'' said Tech Mold President Bill Kushmaul. ``You have to wonder what's going to be left for us.''
But Nypro's Jones said the molding community must change to embrace a global economy if it is to survive.
``In three to five years, many companies will cease to exist or go Chapter 11 if they don't change,'' he warned. ``It won't be because they didn't have good management, but that they are not [patterning their company] to today's marketplace.''
Nypro is backing up those ideas with U.S. dollars. The company plans to invest about $50 million this year - including opening the two plants in Suzhou - in new overseas facilities and equipment. By 2005, about three-quarters of Nypro's sales will come from outside North America, up from about half its sales now, Jones said.
The company had made molds at its plant in Hong Kong before launching the China tooling shop, he said. The 50,000-square-foot facility will make tools for a number of Nypro customers in China, including many medical companies served by its adjacent molding plant in Suzhou.
The company also will launch a 45,000-square-foot painting and decorating plant in Suzhou in about a month, he said. The facility also will perform vacuum metalizing of Nypro's parts, Jones said.
The company will have about 400 employees at the three-building Suzhou campus. During the past two years, Nypro has added about 1,000 workers in China, Jones said.
Nypro also plans to open two new facilities in Europe during 2003 and possibly more facilities in Asia, Jones said. The Clinton, Mass.-based molder now has 59 locations in 15 countries, including 10 plants on mainland China and a tooling and engineering center in Hong Kong.
The company is making a less-public push to get its systems and executives up to speed on the global changes. About 85 Nypro executives recently made a trek to China for plant visits and a conference on doing business there, he said.
Nypro has launched global program-management systems that allow the company to mold similar products in different regions, Jones said. The company also has an array of currency managers on staff who can help with global purchasing and offer futures hedging to manage risk, he said.
Jones admitted that its world-wide campaign could not be done easily by a smaller company on a more-limited budget. ``We have resources that many other molders could not have,'' he said. ``We recognize that this gives us an advantage.''
With sales of close to $90 million last year, Tessy fits in the smaller-molder category. Yet, that company first opened a 15,000-square-foot plant in China in 2000 and then moved to its larger facility a year later.
The upstate New York molder will install six new injection presses in Shanghai for a total of 11 machines there, Raffa said. Most of those presses will be added during the next several months, he said.
Tessy performs molding and assembly work for Xerox Corp. and Delphi Automotive Systems at the Shanghai plant, Raffa added.
Shanghai-based toolmaker Bai Ying is setting up a satellite facility at the Tessy plant, Raffa said. That move, due to be completed in February, will allow Tessy to add services to its customer base in China, he said.
An unspecified U.S.-based metal stamper also will open a location at the Tessy site in the next few months, Raffa said. The stamper specializes in metal parts for batteries, he said.
The moves will help Tessy offer more-complete services to customers in a region where U.S. suppliers still are relatively scarce, he said.
Countering the perception that labor is driving the move to China, Tessy now has 60 people at the Shanghai facility, down from 150 people two years ago, Raffa said. The staff reductions come from Tessy's move from labor-intensive assembly work in China to a plant now focused more on molding, he said.
How long will the China boom continue? Jones at Nypro said about 300 million more workers are expected to come from the country's hinterlands looking for work during the next several years. That will keep wages fairly low and hiring plentiful, he said.
But in three to five years, wages could begin to rise in China the way they have in other developing countries, Jones added. That could predicate a long-term shift by Nypro to another low-cost region, he said. The next growth region could be India, where a skilled work force already exists, Jones said.
``We could always shift and start up in a different place,'' said Jones, whose company has opened 17 plants since early 2001.
``The key is to stay ahead in the global marketplace.''